Would current searchers be interested in other deals?
April 10, 2019
by an investor from Fort Lewis College in Denver, CO, USA
I am interested in the search fund model as both an investor and finding acquisition companies on our own. I am curious if there are searchers out there that would be interested in potentially stepping into deals we find where we bring them in as CEO. I know that is a bit of a “hybrid” model, but we are interested in acquiring companies in several industries and we need to bring in CEO’s to operate those. Finding a current searcher, from my perspective, might be a great way to accomplish that for us. I could hire a CEO, but I like the searcher mindset with people already pursuing their goal in an entrepreneurial way now. We have a team of people searching/underwriting deals so we have an opportunity to source more deals, more quickly than maybe some solo searchers. It seems to me the “match” would be self--funded searchers only?
I would be curious what the feedback on that idea is. Maybe that is being done already, but it seems to me that might be a good model for both of us.
from IESE Business School in Amsterdam, Netherlands
My personal take is that SF model is a great base for introducing modifications to it in order to address specific needs. Just like in your case: you have identified targets and need CEOs with SF mentality. There is the common interest between the parties and hence should be a solution.
And I see potential not only in cases like yours. Imagine, a company/multinational that has a growth strategy through acquisition. It seams to me a perfect setting to promote and give more responsibilities to an internal talent through modifying the SF model, i.e. assign searcher function to one of the current high performing employees to search for the next target, lead the acquisition and integration projects, and manage the business unit afterwards. This seems to me as a combined great talent development (and in general - HR) policy, introducing a culture of intrapreneurship, support of the growth strategy, increasing employee loyalty, education of the future CEO, as the process goes, about the specific market conditions and etc.
Because of my personal situation, I went for another modification of the model in my search. I have already limited my search to one country and one industry. This is because I see the trends in the industry, undergoing changes in it and the business opportunities related to them. As a result, I am including an additional one pager to my PPM with the ideas on how the target will be improved once acquired. Some SF investors may say that the search is too specific, narrow and the risks of not finding the right target are high, i,e. risky for the ticket investment. However, I see it the opposite: at the time of putting money in the search phase, the investor will already has the clear feeling on whether the future measures can lead to increased Co value, which decreases the risks for the ticket investment. In other words, under the established SF model, the investor is commuting funds in the search phase without clarity on (i) whether a target will be identified and (ii) whether the ideas of the searcher for target development will be good enough and, in my case, the (ii) uncertainty is eliminated before investing in the ticket.
I need to admit that the greatest single risk in any possible SF model modification is not to create intensives for the searcher to see his/her role not as an entrepreneur but as an employee.
Apologies for the long post, but wanted to share some of my ideas - I got excited by seeing community members looking in one an the same direction as I currently do.
Finally, would be happy to have a quick chat with you and may be exchange more ideas on potentially modified SF models.
from Massachusetts Institute of Technology in Miami Beach, FL, USA
One recommendation: since you're effectively using searchers as a pool of candidates to hire for a job, remain open to candidates who aren't searchers. You might dedicate the bulk of your recruiting efforts to searchers but, perhaps by chance, you might stumble upon someone who'd be a great fit but who's not currently a searcher.
The hypothesis that searchers would make great CEOs for your acquired companies is fascinating. Keep us updated on how it turns out!